Traditional loyalty (e.g., incentive awards, frequency rewards, etc.) programs have been around for years. Loyalty programs are typically used to help businesses develop and maintain participant loyalty and are used as marketing tools to develop new clientele. A merchant and a transaction account issuer will often enter into a strategic alliance to offer a customer a branded transaction account with a loyalty program. The loyalty program provides incentives from both the merchant and the transaction account issuer. Moreover, the merchant and the transaction account issuer usually offer a consumer additional incentives for using earned incentives with the particular merchant, or allow the user to redeem loyalty awards that are stored with the transaction account issuer at the merchant.
Providing the user with the ability to use the incentive with the merchant typically requires technology and infrastructure which allows that merchant and the transaction account issuer to exchange incentive data (e.g. a loyalty account balance, eligibility, etc.). Given the variety of merchant and transaction account issuer systems, providing a solution that allows the transaction account issuer and the merchant to share information often requires the creation of custom technology. This custom technology typically is implemented on both the transaction account issuer and merchant systems. These systems are expensive to produce and must be individually maintained. Moreover, if the strategic alliance is terminated, the capital investment associated with creating the technology to link the merchant and the transaction account issuer is lost. Creating a strategic alliance also raises other business issues, including cross branding, sharing of confidential information, and potential competing business interest.
As such, it is desirable to a transaction account issuer to provide a user with the ability to use alternative funding sources in connection with purchases from a merchant, without the need to integrate an alternative funding payment system with the merchant.